easy · Private Credit & Debt documentation-covenants-terms
What is the primary purpose of an 'upstream guarantee' from a subsidiary to a parent company borrower?
- To protect the subsidiary from being sold by the parent company during the loan term.
- To ensure the lender has a direct legal claim against the assets and cash flow of the operating subsidiaries.
- To allow the subsidiary to borrow money from the parent company at a lower interest rate.
- To limit the total amount of debt that the subsidiary can incur from other lenders.
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